Coffee futures pushed higher again last week, with the most active September contract on ICE rising 7.8 cents to settle at $2.67 a pound. The move came almost exactly as Sucafina had called it, as overextended short positions were forced to liquidate and pushed the market up toward 270 cents.
Underneath the futures, the physical coffee market is telling a firmer story. Cash prices have stayed stubbornly high, led by Colombia, where differentials for even basic exportable qualities have climbed above +60 US cents a pound. That strength is holding despite Colombia’s Mitaca, its smaller southern crop, reaching its peak, which would normally add supply.
Sucafina reads the gap between high physical prices for quality washed Arabicas and the futures market as a sign that futures may have fallen too far, too fast. With prices low on the screen, farmers are holding back beans and leaving more desperate buyers to pay up. The only thing that would close that dislocation is a large oversupply, and for premium origins like Colombia that is hard to come by, since few other countries can match the cup profile.
Tight and dwindling ICE certified stocks are adding to the support, keeping speculative long positions engaged. On that backdrop, Sucafina expects the market to keep edging higher, toward 280 cents a pound.
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